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Corporate investment and strategic stability in hypercompetition

Author

Listed:
  • Roch Parayre

    (Huntsman Center for Global Competition and Innovation, The Wharton School, University of Pennsylvania, and Decision Strategies International, USA)

  • Dileep Hurry

    (OneSource Information Services, Inc., Concord, MA, USA)

Abstract

As competition accelerates, so do the strategies of players, in the shape of fast-track corporate investment strategies to maneuver around competitors. Under hypercompetition, a corporate strategy for acquiring competitive options may form an evolutionarily stable meta-strategy capable of sustaining persistent disruptive actions. This type of strategy is evolutionarily stable under competition across generations of contests. This paper explains the concept of memetic evolution and applies evolutionary game theory to the study of hypercompetition. We show how this option meta-strategy has superior long-term dynamic stability compared to large acquisitions and small greenfield investments. We demonstrate the disruptive potential of this meta-strategy under hypercompetition, through a simulation analysis of competing strategies in hypercompetitive markets. The concept of evolutionarily stable strategies implies that hypercompetition may indeed be an enduring phenomenon. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • Roch Parayre & Dileep Hurry, 2001. "Corporate investment and strategic stability in hypercompetition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(4-5), pages 281-298.
    • Handle: RePEc:wly:mgtdec:v:22:y:2001:i:4-5:p:281-298
    DOI: 10.1002/mde.1021
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    References listed on IDEAS

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    1. Paul J. H. Schoemaker, 1990. "Strategy, Complexity, and Economic Rent," Management Science, INFORMS, vol. 36(10), pages 1178-1192, October.
    2. Mailath, George J., 1992. "Introduction: Symposium on evolutionary game theory," Journal of Economic Theory, Elsevier, vol. 57(2), pages 259-277, August.
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    Cited by:

    1. ZHOU, Chaohong & VAN WITTELOOSTUIJN, Arjen, 2009. "Evolutionary game theory and organizational ecology: The case of resource-partitioning theory," ACED Working Papers 2009001, University of Antwerp, Faculty of Business and Economics.
    2. ZHOU, Chaohong & VAN WITTELOOSTUIJN, Arjen, 2009. "Evolutionary game theory and organizational ecology: The case of resource-partitioning theory," Working Papers 2009002, University of Antwerp, Faculty of Business and Economics.

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